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Exposure Draft of Revised SA 299, Joint Audits for Comments
June, 28th 2017
            Exposure Draft
Standard on Auditing (SA) 299 (Revised)
             Joint Audits




(Last date for comments: August 11, 2017)




                       Issued by
      Auditing and Assurance Standards Board
    The Institute of Chartered Accountants of India
           (Set up by an Act of Parliament)
                       New Delhi
                     Exposure Draft
 Standard on Auditing (SA) 299 (Revised)
              Joint Audits


Your comments on this Exposure Draft should reach us by August
11, 2017. Comments are most helpful if they indicate the specific
paragraph(s) to which they relate, contain a clear rationale and,
where applicable, provide a suggestion for alternative wording. The
comments should be sent to:

       Secretary, Auditing and Assurance Standards Board
         The Institute of Chartered Accountants of India
                  ICAI Bhawan, A-29, Sector-62,
                NOIDA, Uttar Pradesh ­ 201 309

Comments can also be e-mailed at: aasb@icai.in
   Standard on Auditing (SA) 299 (Revised)
                Joint Audits

Contents
                                                                                        Paragraph(s)



Introduction

Scope of this SA ..................................................................................... 1-3

Effective date .............................................................................................4

Objectives ............................................................................................. 5-8

Requirements

Audit Planning ...................................................................................... 9-14

Division of Work, Responsibility and Co-ordination
among Joint Auditors .......................................................................... 15-18

Audit Conclusion and Reporting ......................................................... 19-22

Communication with Those Charged with Governance ............................23

Application and Other Explanatory Material

Initial Steps .........................................................................................A1-A2

Scope of this SA ...................................................................................... A3

Audit Planning ....................................................................................A4-A5

Division of Work, Responsibility and Co-ordination
among Joint Auditors ........................................................................A6-A13

General........................................................................................... A14-A17
Introduction

Scope of this SA

1.      The practice of appointing more than one auditor to conduct the
audit of large entities is followed for a longtime, sometimes voluntarily by
the shareholders or sometimes due to the requirements of laws or
regulations. Such auditors, known as joint auditors, conduct the audit
jointly and report on the financial statements of the entity. This Standard
on joint audits lays down the principles for effective conduct of joint audit
to achieve the overall objectives of the auditor as laid down in SA 200
"Overall Objectives of the Independent Auditor and the conduct of an audit
in accordance with Standards on Auditing". It deals with the special
considerations in carrying out audit by Joint Auditors. Accordingly, in
addition to the requirements enunciated in this standard, the joint auditors
also need to comply with all the relevant requirements of other applicable
Standards on Auditing. (Ref: Para. A1-A2)






2.     A joint audit is an audit of financial statements of an entity by two or
more auditors appointed with the objective of issuing an audit report. Such
auditors are described as joint auditors.

3.      The Standard does not deal with the relationship between a
principal auditor who is appointed to report on the financial statements of
an entity and another auditor who is appointed to report on the financial
statements of one or more component (divisions, branches, subsidiary,
joint venture, associates, other entity) included in the financial statements
of the entity. (Ref: Para. A3)

Effective Date

4.    This Standard on Auditing is effective for audits of financial
statements for periods beginning on or after .....................

Objectives
5.      To lay down broad principles for the joint auditors in conducting the
joint audit.

                                      1
6.     To provide a uniform approach to the process of joint audit.

7.    To clearly identify the distinct areas of work and coverage there of
by each joint auditor to arrive at a common audit report.

8.      To identify individual responsibility and accountability of each of the
joint auditors in regard to areas covered by them and to enable
identification of situations which would lead to joint responsibility and
accountability of all joint auditors.

Requirements

Audit Planning (Ref: Para. A4-A5)

9.     The engagement partner and other key members of the
engagement team from each of the joint auditors shall be involved in
planning the audit.

10.    The joint auditors shall jointly establish an overall audit strategy that
sets the scope, timing and direction of the audit, and that guides the
development of the audit plan.

11.     Prior to the commencement of the audit, the joint auditors shall
discuss and develop a joint audit plan. In developing the joint audit plan,
the joint auditors shall:

a. Identify division of audit areas among the joint auditors that define the
   scope of the work of each joint auditor;

b. Ascertain the joint reporting objectives of the engagement to plan the
   timing of the audit and the nature of the communications required;

c.   Consider and communicate to all joint auditors the factors that, in the
     auditor's professional judgment, are significant in directing the
     engagement team's efforts;



                                       2
d. Consider the results of preliminary engagement activities and, where
   applicable, whether knowledge gained on other or similar
   engagements performed earlier by the respective engagement
   partner(s) for the entity is relevant.

e. Ascertain the nature, timing and extent of resources necessary to
   perform the engagement.

12.     At this stage, fraud risks and other risks of material misstatement
need to be considered and assessed, if any, by each of the joint auditors
and shall be communicated, and documented, whether pertaining to the
entity level or to the area of allocation among the other joint auditors.

13.    The joint auditors shall discuss and document the nature, timing,
and the extent of the audit procedures for common and specific allotted
areas of audit to be performed by each of the joint auditors in discussion
with those charged with governance considering relevant experience and
strengths of joint auditors and rotation of audit areas.

14.   After identification and allocation of work among the joint auditors,
the work allocation document shall be signed by all the joint auditors and
such work distribution shall be communicated to those charged with
governance of the entity.

Division of Work, Responsibility and Co-ordination among Joint
Auditors (Ref: Para. A6-A13)

15.    In respect of audit work divided among the joint auditors, each joint
auditor is responsible only for the work allocated to such auditor including
proper execution of the audit procedures.

16.   All the joint auditors are jointly and severally responsible for:

a. the audit work which is not divided among the joint auditors and is
   carried out jointly;



                                      3
b. decisions taken by all the joint auditors under audit planning phase
   concerning the nature, timing and extent of the audit procedures to be
   performed by each of the joint auditors. It may, however, be clarified
   that all the joint auditors are responsible only in respect of the
   appropriateness of the decisions concerning the nature, timing and
   extent of the audit procedures agreed upon among them, proper
   execution of these audit procedures is the individual responsibility of
   the joint auditor concerned;

c.   matters which are brought to the notice of the joint auditors by any one
     of them and on which there is an agreement among the joint auditors;

d. examining that the financial statements of the entity comply with the
   requirements of the relevant statutes;

e. presentation and disclosure of financial statements as required by the
   applicable financial reporting framework;

f.   ensuring that the audit report complies with the requirements of the
     relevant statutes;

g. documentation of all the issues raised in the meeting of joint auditors,
   the decisions taken thereon and confirmations given by each joint
   auditor to the other joint auditors.

17.     Where, in the course of his work, a joint auditor comes across
matters which are relevant to the areas of responsibility of other joint
auditors and which deserve their attention, or which require disclosure or
require discussion with, or application of judgment by other joint auditors,
he shall communicate the same to all the other joint auditors in writing
prior to the completion of the audit.

18.    It shall be the responsibility of each joint auditor to determine the
nature, timing and extent of audit procedures to be applied in relation to
the areas of work allocated to him. It is the individual responsibility of each


                                      4
joint auditor to study and evaluate the prevailing system of internal control,
assessment of risk relating to the areas of work allocated to him.

Audit Conclusion and Reporting

19.     The joint auditors shall ideally issue a single audit report giving an
unified opinion. However, where the joint auditors are in disagreement
with regard to the opinion or any matters to be covered by the report, each
one of them shall express his opinion in a separate report. A joint auditor
is not bound by the views of the majority of the joint auditors regarding the
opinion or matters to be covered in the report and shall express his
opinion in a separate report in case of a disagreement. In such
circumstances, the report issued by the joint auditor shall make a
reference to the separate report issued by the other joint auditors. Such
reporting would be under the title "Other matter paragraph" as per SA 706,
"Emphasis of Matter Paragraphs and Other Matter Paragraphs in the
Independent Auditor's Report".

20.    Each joint auditor is entitled to assume that:

a. The other joint auditors have carried out their part of the audit work
   and the work has actually been performed in accordance with the
   Standards on Auditing issued by the Institute of Chartered
   Accountants of India.

b. The other joint auditors have brought to his notice any departure from
   applicable financial reporting framework or any material observations
   that are significant and relevant to their responsibilities noticed in the
   course of the audit.

21.    Where separate financial statements of a division/branch are
audited by one of the joint auditors, the other joint auditors are entitled to
proceed on the basis that such financial statements comply with all the
legal and regulatory requirements and present a true and fair view of the
state of affairs and of the working results of the division/branch concerned,
subject to observations as may be noticed apparently from the financial

                                      5
statements in respect of disclosures and presentation or        as may be
communicated by the joint auditor concerned.

22.    Before finalizing their joint audit report, the joint auditors shall
discuss and communicate with each other their respective conclusions
that would form the content of the audit report.

Communication with Those Charged with Governance

23.    When the joint auditors expect to modify the opinion in the auditor's
report, the joint auditors shall communicate with those charged with
governance the circumstances that led to the expected modification and
the proposed wording of the modification to ensure compliance with SA
705. If the joint auditors expect to include an Emphasis of Matter or an
Other Matter paragraph in the auditor's report, the joint auditors shall
communicate with those charged with governance regarding this
expectation and the proposed wording of this paragraph to ensure
compliance with SA 706.

Application and Other Explanatory Material

Initial Steps (Refer: Para. 1)

A1. The success of joint audit process depends to a large extent on
communication, trust, lucidity and coordination among the joint auditors.
The joint auditors shall share a common goal of conducting the audit in
most effective manner possible. The ideal audit plan evolves in an
atmosphere of mutual cooperation, trust and synergy that can only be
obtained when the joint auditors are committed to straight forward and
honest communication.

A2. Regarding the engagement letter to be obtained, it is advisable to
accept a common engagement letter. However, if the internal processes of
any of the joint audit firms demand any specific clauses that are not
required by the others, a separate engagement letter may also be







                                     6
obtained from the client with the knowledge and a copy to the other joint
audit firms.

Scope of this SA (Refer: Para. 3)

A3. This Standard does not deal with the relationship between auditors
who are not joint auditors, e.g.

   Relationship between a company auditor appointed under section 139
   of the Companies Act, 2013 and branch auditor appointed under
   section 143(8) of the Companies Act, 2013.
   Relationship between the auditor of branch X and the auditor of
   branch Y of an entity.
   Relationship between the auditor of subsidiary P and the auditor of
   subsidiary Q of a company.
   Relationship between the auditor of subsidiary of a company and the
   auditor of the company.
   Relationship between the external auditor of a company and the
   internal auditor of the company.

Audit Planning (Refer: Para. 9-14)

A4. Joint audit planning process includes several key elements that
impact timeliness and quality of joint audit. These elements which are
critical to joint audit planning are:

   General overview of business activities, financials and known
   significant changes from the previous period. Further, list of significant
   transactions and information that is new and different from the
   previous period.
   Division of audit areas keeping in view various factors such as:
   o   geographical spread,
   o   business segments / business units,

                                     7
      o    Balance sheet, profit & loss and other reporting requirements,
      o    Function wise etc,
      o    Areas which cannot be allocated among the joint auditors,
      o    Work allocation in a manner that one audit firm does not share
           more work than the other,
      o    It shall be ensured that no auditable area remains unallocated
           among the joint auditors.
      Risk Analysis.
      Materiality.
      Resolution of various audit queries/ observations and audit conclusion
      process to achieve the objective of common audit report.
      After the detailed planning process, audit firms will prepare the
      necessary documentation for the areas assigned to them under the
      planning process. The document so prepared shall also adhere to the
      guiding principles stipulated under various accounting and auditing
      standards and shall have bearing on the audit planning document.

A5. The documentation of division of work helps in avoiding any dispute
or confusion among the joint auditors regarding scope of work to be
carried out by them. In case of any dispute/ confusion arising in this
regard, reference may be made to the documentation signed by the joint
auditors. Further, the communication of division of work to the entity helps
in avoiding any dispute or confusion which may arise between the entity
and the joint auditors.

Division of Work, Responsibility and Co-ordination among Joint
Auditors (Ref: Para 15-18)

A6.       Division of work among joint auditors shall be such to ensure:

          Optimum utilization of specialized skills and experience.



                                        8
       More or less equal division of work or where this is not possible,
       division in harmony with the allocation of responsibilities

A7. The audit checklist of the respective areas of audit can be
developed by respective joint auditors. The issues such as
appropriateness of using test checks or sampling shall be decided by each
joint auditor in relation to his own area of work.

A8. Each joint auditor shall communicate with other joint auditors the
relevant observations that deserve their attention, which he feels may not
come to the joint auditor's attention in the course of carrying out his
responsibilities as per the mutually agreed scope and coverage and which
may have bearing on the audit areas covered by the joint auditor or having
bearing on the financial statements as a whole.

A9. In the case of audit of a large entity with several branches,
including those required to be audited by branch auditors, the branch audit
reports/returns may be required to be scrutinised by different joint auditors
in accordance with the allocation of work. In such cases, it is the specific
and separate responsibility of each joint auditor to review the audit
reports/returns of the divisions/branches allocated to him and to ensure
that they are properly incorporated into the accounts of the entity. In
respect of the branches which do not fall within any divisions or zones
which are separately assigned to the various joint auditors, they may
agree among themselves as regards the division of work relating to the
review of such branch returns. It is also the separate and specific
responsibility of each joint auditor to exercise his judgement with regard to
the necessity of visiting such divisions/branches in respect of which the
work is allocated to him.

A10. A significant part of the audit work involves obtaining and
evaluating information and explanations from the management. This
responsibility is shared by all the joint auditors unless they agree upon a
specific pattern of distribution of this responsibility. In cases where specific
divisions, zones or units are allocated to different joint auditors, it is the

                                       9
separate and specific responsibility of each joint auditor to obtain
appropriate information and explanations from the management in respect
of such divisions/zones/units and to evaluate the information and
explanations so obtained by him.

A11. Each joint auditor is entitled to assume that the other joint auditors
have carried out their part of the audit work in accordance with the
generally accepted audit procedures.1 It is not necessary for a joint auditor
to review the work performed by other joint auditors or perform any tests in
order to ascertain whether the work has actually been performed in such a
manner. Each joint auditor is entitled to rely upon the other joint auditors
for bringing to his notice any departure from generally accepted
accounting principles or any material error noticed in the course of the
audit.

A12. Each joint auditor will, at the conclusion meeting, communicate to
all joint auditors confirming the agreed coverage under his respective audit
areas.
A13. A common note or points to be presented / discussed at the Audit
committee meeting be prepared by the joint auditors. If any of the Joint
auditors feels the need for some additional point to be discussed, he may
do so, even though other joint auditors may not include this in the common
points.
General

A14. Joint Auditors shall ensure rationality in all other matters.

A15. It is expected that the work allocation among the joint auditors is
more or less equal in terms of time spent as well. In case where the areas
allocated are such where there is a material difference in the time spent by




1
 Reference may be made in this regard to the Standards on Auditing and other mandatory
Statements relating to auditing matters issued by the Council of the Institute from time to time.

                                              10
each joint auditor, it would be divided on the basis of expected time spent
on the respective area of allocation under audit.

A16. It is expected that the common management representation letter
be obtained by the joint auditors. However, if any of the joint audit firm has
specific requirements to satisfy its internal guidelines, separate
management representation letter may be obtained with a knowledge and
copy to other joint auditors.

A17. Rotation of the areas of audit among the joint auditors shall be
encouraged.




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